When Penguin 4.0 launched in September 2016, the story from Gary Illyes of Google was that Penguin now just devalued spammy links, rather than penalizing a site by adjusting the site’s ranking downward, AKA a penalty.

Apparently for Penguin there is now “less need” for a disavow, according to a Facebook discussion between Gary Illyes and Barry Schwartz of Search Engine Land back in September. He suggested that webmasters can help Google find spammy sites by disavowing links they know are bad. He also mentioned that manual actions still happen — and so I think we can safely infer that the disavow file is still useful in manual penalty recovery.

But algorithmic penalties DO still exist. A client of mine, who’d in the past built a lot of really spammy links to one of their sites, had me take a look at their backlinks about 10 days ago and build a disavow file. There was no manual penalty indicated in Search Console, but they didn’t rank at all for terms they were targeting — and they had a plenty strong backlink profile even after ignoring the spammy links.